Moving from Personal Pension to Company Pension scheme

[euroDilbert]

A friend works in a company where until now there has been no company pension scheme. As he is about 3 years from retirement, he was investing the maximum % allowable into a private pension. Spurred on by compulsory enrolment, his company is now offering a pension scheme to all employees, with a 2.5% contribution from them. He is now considering switching to the company scheme for the final few years of employment. There are at least two possible benefits from this (1) The 2.5% employer contribution (2) He has been told there will be more flexibility in accessing the pension and possible tax benefits (e.g. lump sum access).

Are there any other considerations or pitfalls around this ?

(He realises there are other issues re charges, investment choices etc. - but will ignore those for the moment, as they apply to either option).

 

[conor_mc]

Don’t ignore charges. There can be be significant differences between personal and company pension charges that rack up over the years. Too many folks think pension investing ends when you first drawdown at 65yo, but some of your money remains invested for 15-30 years beyond this. If there was a significant differential, I personally would be considering how to max out my last few years of AVC’s.

Other benefits beyond that and the 2.5% include being able to take pensions/lump sums at different points in time, but optimising this depends on personal wants/needs.

 

[AJAM]

It's not either or. You can invest in the company pension to take advantage of the 2.5% employer match.
And then (if the fees are lower in your existing pension) you can put the balance in your private pension.

If the fees are lower in the employer pension, then it makes sense to add all the contributions there.

 

[Fortune]

It's not either or. You can invest in the company pension to take advantage of the 2.5% employer match.
And then (if the fees are lower in your existing pension) you can put the balance in your private pension.

If the fees are lower in the employer pension, then it makes sense to add all the contributions there.

I'm not sure that tax relief would be available on the private pension (either an RAC or PRSA) in this scenario.

 

[jpd]

The amount of tax relief you can claim depends on your age not the type of pension product you are contributing to

If you are 60+, you can claim relief on pension payments made up to a limit of 40% of your earnings

 

[GSheehy]

OP needs to clarify what type of 'personal' 'private pension' - RAC or PRSA - and what type of 'company scheme' - PRSA Scheme or Occupational Pension Scheme. And, charges on both.